unemployment insurance: legislative issues in the 114 …...unemployment insurance: legislative...

Unemployment Insurance:

Legislative Issues in the 114th Congress

Julie M. Whittaker

Specialist in Income Security

Katelin P. Isaacs

Analyst in Income Security

October 26, 2016

Congressional Research Service

7-5700

www.crs.gov

R43993

The House Ways and Means Committee is making available this version of this Congressional Research Service

(CRS) report, with the cover date shown, for inclusion in its 2016 Green Book website. CRS works exclusively for

the United States Congress, providing policy and legal analysis to Committees and Members of both the House and

Senate, regardless of party affiliation.

Unemployment Insurance: Legislative Issues in the 114th Congress


Summary The 114

th Congress continues to consider many issues related to unemployment insurance (UI)

programs: Unemployment Compensation (UC), the temporary, now-expired Emergency

Unemployment Compensation (EUC08), and Extended Benefits (EB). This report gives a brief

overview of the UI programs that may provide benefits to eligible unemployed workers. In

addition, it briefly summarizes the President’s budget proposal for FY2017.

The National Defense Authorization Act for Fiscal Year 2016, P.L. 114-92, altered certain

conditions for individuals to receive Unemployment Compensation for Former Servicemembers

(UCX).

This report also describes proposed UI legislation in the 114th Congress, organized by the

following categories:

Concurrent receipt of Social Security Disability Insurance (SSDI) and UI

benefits—S. 343, S. 499, H.R. 5919, H.R. 918, and S. 2005

UI program integrity—H.R. 2503 and H.R. 2512

Unemployment Compensation for Former Servicemembers (UCX)—P.L. 114-92,

S. 1376, and H.R. 1735

Drug testing—H.R. 1136, H.R. 2148, and H.R. 5945

Rehiring UI beneficiaries and exhaustees—H.R. 481, H.R. 2265, H.R. 2721,

H.R. 3555, H.R. 3622, H.R. 4593, H.R. 4973 and S. 1517

Reauthorize EUC08—H.R. 2721 and H.R. 3555

Vouchers and demonstration projects—H.R. 2509, H.R. 2721, and H.R. 3555

Job training and education—H.R. 2219

Relocation Subsidies—H.R. 2755

Short-time Compensation (STC)—H.R. 2721, H.R. 3555, and H.R. 5408

New benefits for certain energy workers—H.R. 5669 and S. 2398

Domestic violence—H.R. 3841 and S. 2208

For information on the expired EUC08 program, which provided additional unemployment

benefits depending on state economic conditions during the period of July 2008 to December

2013, see CRS Report R42444, Emergency Unemployment Compensation (EUC08): Status of

Benefits Prior to Expiration.

For a brief overview of UC, see CRS In Focus IF10336, The Fundamentals of Unemployment

Compensation.



Contents

Overview of Unemployment Insurance Programs .......................................................................... 1

Unemployment Compensation Program ................................................................................... 1 Extended Benefit Program ........................................................................................................ 2

EB Triggers ......................................................................................................................... 3 Expired Emergency Unemployment Compensation Program .................................................. 4

Unemployment Insurance Benefits and the Sequester .................................................................... 4

FY2016 Status of the Sequester ................................................................................................ 4 FY2015 Sequester of UI Benefits ............................................................................................. 5

State Fiscal Concerns Alleviating State Unemployment Compensation Stress .............................. 5

President’s Budget Proposal for FY2017 ........................................................................................ 5

Federal Unemployment Tax Changes ....................................................................................... 6 Requiring States to Maintain Increased UTF Balances............................................................. 6 State Requirement to Provide 26 Weeks of UC ........................................................................ 6 Modernization Incentives .......................................................................................................... 6 EB Reform ................................................................................................................................ 7 Wage Insurance ......................................................................................................................... 7

Enacted Laws in the 114th Congress ................................................................................................ 8

The National Defense Authorization Act for Fiscal Year 2016 (P.L. 114-92) ........................... 8

Legislative Proposals in the 114th Congress .................................................................................... 8

Concurrent Receipt of SSDI and UI Benefits ........................................................................... 8 UI Program Integrity ................................................................................................................. 9 Unemployment Compensation for Former Servicemembers .................................................... 9 Drug Testing .............................................................................................................................. 9 Rehiring UI Beneficiaries and Exhaustees .............................................................................. 10 Reauthorize Emergency Unemployment Compensation ......................................................... 11 Vouchers and Demonstration Projects ...................................................................................... 11 Job Training and Education ...................................................................................................... 11 Relocation Subsidies ................................................................................................................ 11 Short-Time Compensation ...................................................................................................... 12 Unemployment Benefits for Energy Workers ......................................................................... 12 Domestic Violence .................................................................................................................. 12

Contacts

Author Contact Information .......................................................................................................... 13


Congressional Research Service 1

he unemployment insurance (UI) system has two primary objectives: (1) to provide

temporary, partial wage replacement for involuntarily unemployed workers and (2) to

stabilize the economy during recessions. In support of these goals, several UI programs

provide benefits for eligible unemployed workers.

Overview of Unemployment Insurance Programs In general, when eligible workers lose their jobs, the joint federal-state Unemployment

Compensation (UC) program may provide up to 26 weeks of income support through regular UC

benefit payments. UC benefits may be extended for up to 13 weeks or 20 weeks by the Extended

Benefit (EB) program if certain economic situations exist within the state.1 During previous

Congresses, the temporarily authorized Emergency Unemployment Compensation (EUC08)

program provided additional weeks of benefits (depending on the date, from 13 weeks to 53

weeks). EUC08 benefits expired on December 28, 2013, and are no longer authorized. Currently,

although the UC and EB programs are authorized, no state is in an active EB period.

For information on the expired EUC08 program, which provided additional unemployment

benefits depending on state economic conditions during the period of July 2008 to December

2013, see CRS Report R42444, Emergency Unemployment Compensation (EUC08): Status of

Benefits Prior to Expiration.

Unemployment Compensation Program

The Social Security Act of 1935 (P.L. 74-271) authorizes the joint federal-state UC program to

provide unemployment benefits under which most states provide up to a maximum of 26 weeks

of UC benefits.2 Former federal workers may be eligible for unemployment benefits through the

Unemployment Compensation for Federal Employees (UCFE) program.3 Former U.S. military

servicemembers may be eligible for unemployment benefits through the Unemployment

Compensation for Ex-servicemembers (UCX) program.4 The Emergency Unemployment

Compensation Act of 1991 (P.L. 102-164) provides that ex-servicemembers be treated the same

as other unemployed workers with respect to benefit levels, the waiting period for benefits, and

benefit duration.

Although federal laws and regulations provide broad guidelines on UC benefit coverage,

eligibility, and determination, the specifics regarding UC benefits are determined by each state.

1 For detailed information on each of these programs, see CRS Report RL33362, Unemployment Insurance: Programs

and Benefits. Certain groups of workers may qualify for income support from additional unemployment insurance (UI)

programs, including Trade Adjustment Assistance (TAA), Reemployment Trade Adjustment Assistance (RTAA), and

Disaster Unemployment Assistance (DUA). Workers who lose their jobs because of international competition may

qualify for income support through the TAA program or the RTAA (for certain workers aged 50 or older). Workers

may be eligible to receive DUA benefits if they are not eligible for regular Unemployment Compensation (UC) and

their unemployment may be directly attributed to a declared natural disaster. For more information on the TAA and

RTAA programs, see CRS Report R42012, Trade Adjustment Assistance for Workers. 2 For more details on these states with less than 26 weeks of UC available, see CRS Report R41859, Unemployment

Insurance: Consequences of Changes in State Unemployment Compensation Laws. In addition, the maximum UC

duration is 28 weeks in Montana and 30 weeks in Massachusetts. When EB benefits are available, any available UC

benefits above 26 weeks are treated effectively as if they were EB payments. 3 5 U.S.C. §8501-8508. 4 5 U.S.C. §8521-8525. For more information on the Unemployment Compensation for Ex-servicemembers (UCX)

program, see CRS Report RS22440, Unemployment Compensation (Insurance) and Military Service.

T



This results in essentially 53 different programs.5 Generally, UC eligibility is based on attaining

qualified wages and employment in covered work over a 12-month period (called a base period)

prior to unemployment. All states require a worker to have earned a certain amount of wages or to

have worked for a certain period of time (or both) within the base period to be monetarily eligible

to receive any UC benefits. The methods states use to determine monetary eligibility vary greatly.

Most state benefit formulas replace approximately half of a claimant’s average weekly wage up to

a weekly maximum.6

Along with monetary requirements, each state’s UC law requires individuals to meet

nonmonetary requirements. With few exceptions, individuals must have lost their jobs through no

fault of their own and must be able to work, available for work, and actively seeking work. These

monetary and nonmonetary requirements help ensure that UC benefits are directed toward

workers with strong labor market experience who are experiencing a spell of unemployment

caused by economic conditions.

The UC program is financed by federal taxes under the Federal Unemployment Tax Act7 (FUTA)

and by state payroll taxes under the State Unemployment Tax Act (SUTA). The 0.6% effective net

FUTA tax paid by employers on the first $7,000 of each employee’s earnings (no more than $42

per worker per year) funds federal and state administrative costs, loans to insolvent state UC

accounts, the federal share (50%) of EB payments, and state employment services.8

SUTA taxes on employers are limited by federal law to funding regular UC benefits and the state

share (50%) of EB payments. Federal law requires that the state tax be on at least the first $7,000

of each employee’s earnings (it may be more) and requires that the maximum state tax rate be at

least 5.4%. Federal law also requires each employer’s state tax rate to be based on the amount of

UC paid to former employees (known as “experience rating”). Within these broad requirements,

states have great flexibility in determining the SUTA structure of their state. Generally, the more

UC benefits paid out to its former employees, the higher the tax rate of the employer, up to a

maximum established by state law. Funds from FUTA and SUTA are deposited in the appropriate

accounts within the Unemployment Trust Fund (UTF).

Extended Benefit Program

The EB program was established by the Federal-State Extended Unemployment Compensation

Act of 1970 (EUCA; P.L. 91-373) (26 U.S.C. §3304, note). EUCA may extend receipt of

unemployment benefits (extended benefits) at the state level if certain economic situations exist

within the state. The President’s FY2017 Budget Proposal contains several proposals to alter the

EB program. See the “President’s Budget Proposal for FY2017” section of this report for details

on the proposals.

5 The District of Columbia, Puerto Rico, and the Virgin Islands are considered to be states under UC law. 6 For details on UC eligibility and benefits, see CRS Report RL33362, Unemployment Insurance: Programs and

Benefits. 7 23 U.S.C. §§3301-11. 8 The Federal Unemployment Tax Act (FUTA) imposes a 6.0% gross tax rate on the first $7,000 paid annually by

employers to each employee. Employers in states with programs approved by the federal government and with no

delinquent federal loans may credit 5.4 percentage points against the 6.0% tax rate, making the minimum net federal

unemployment tax rate 0.6%. Details on how delinquent loans affect the net FUTA tax are in CRS Report RS22954,

The Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States(out of print; available from the

author).



EB Triggers

The EB program is triggered when a state’s insured unemployment rate (IUR) or total

unemployment rate (TUR) reaches certain levels.9 All states must pay up to 13 weeks of EB if the

IUR for the previous 13 weeks is at least 5% and is 120% of the average of the rates for the same

13-week period in each of the two previous years. States may choose to enact two other optional

thresholds. (States may choose one, two, or none.) If the state has chosen one or more of the EB

trigger options, it would provide the following:

Option 1—an additional 13 weeks of benefits if the state’s IUR is at least 6%,

regardless of previous years’ averages.

Option 2—an additional 13 weeks of benefits if the state’s TUR is at least 6.5%

and is at least 110% of the state’s average TUR for the same 13 weeks in either of

the previous two years; an additional 20 weeks of benefits if the state’s TUR is at

least 8% and is at least 110% of the state’s average TUR for the same 13 weeks

in either of the previous two years.

EB benefits are not “grandfathered” (phased-out) when a state triggers “off” the program. When a

state triggers “off” of an EB period, all EB benefit payments in the state cease immediately

regardless of individual entitlement.10

The EB benefit amount is equal to the eligible individual’s weekly regular UC benefits. Under

permanent law, FUTA finances half (50%) of the EB payments and 100% of EB administrative

costs.11

States fund the other half (50%) of EB benefit costs through their SUTA.12

9 The total unemployment rate (TUR) is the three-month average of the ratio of unemployed workers to all workers

(employed and unemployed) in the labor market. The TUR is essentially a three-month average version of the

unemployment rate published by the Bureau of Labor Statistics (BLS) and based on data from the BLS’s monthly

Current Population Survey (CPS). The insured unemployment rate (IUR) is the ratio of UC claimants divided by

individuals in UC-covered jobs. In addition, the IUR uses a different base of workers in its calculations as compared

with the TUR. The IUR excludes several groups used in TUR calculations: self-employed workers, unpaid family

workers, workers in certain not-for-profit organizations, and several other, primarily seasonal, categories of workers. In

addition to those unemployed workers whose last jobs were in the excluded employment, the IUR excludes the

following: those who have exhausted their UC benefits (even if they are receiving EB benefits); new entrants or

reentrants to the labor force; disqualified workers whose unemployment is considered to have resulted from their own

actions rather than from economic conditions; and eligible unemployed persons who do not file for benefits. 10 EB benefits on interstate claims are limited to two extra weeks unless both the worker’s state of residence (e.g.,

Texas) and the worker’s state of previous employment (e.g., Louisiana) are in an EB period. 11 The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, P.L. 111-312, as amended

(the final time by P.L. 112-240), made technical changes to certain triggers in the EB program. These changes allowed

states to temporarily use lookback calculations based on three years of unemployment rate data (rather than the

permanent-law lookback of two years of data) as part of their mandatory IUR and optional TUR triggers if states would

otherwise trigger off or not be on a period of EB benefits. Using a two-year versus a three-year EB trigger lookback

was an important adjustment at the time of the signing of P.L. 111-312 (December 17, 2010) because many states were

likely to trigger off of their EB periods despite high, sustained—but not increasing—unemployment rates. For more

information on these state law changes, see CRS Report R41859, Unemployment Insurance: Consequences of Changes

in State Unemployment Compensation Laws. The authorization for the temporary EB trigger modifications expired the

week ending on or before December 31, 2013. 12 P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (most recently amended by P.L. 112-240, the

American Taxpayer Relief Act of 2012), temporarily changed the federal-state funding arrangement for the EB

program. The FUTA financed 100% of EB benefits from February 17, 2009, through December 31, 2013. The one

exception to the 100% federal financing was for those “non-sharable” EB benefits (work not subject to FUTA taxes

such as state and local government employment). Those non-sharable benefits continued to be 100% financed by the

former employers.



Expired Emergency Unemployment Compensation Program

On June 30, 2008, President George W. Bush signed the Supplemental Appropriations Act of

2008 (P.L. 110-252), which created a new temporary unemployment insurance program, the

EUC08 program. This was the eighth time Congress had created a federal temporary program to

extend unemployment compensation during an economic slowdown.13

State UC agencies

administered the EUC08 benefit along with regular UC benefits.

The authorization for this program was extended multiple times since its enactment, but it was

terminated on December 28, 2013, for all states except New York (December 29, 2013) and North

Carolina (June 29, 2013).14

Unemployment Insurance Benefits and

the Sequester The sequester order required by the Budget Control Act of 2011 (BCA; P.L. 112-25) and

implemented on March 1, 2013 (after being delayed by P.L. 112-240), affected some but not all

types of unemployment insurance expenditures. Regular UC, UCX, and UCFE payments are not

subject to the sequester reductions. EB, EUC08 (when available), and most forms of

administrative funding are subject to the sequester reductions.15

Please see CRS Report R43133,

The Impact of Sequestration on Unemployment Insurance Benefits: Frequently Asked Questions,

for additional information on the impact of sequestration on UI benefits and sequestration for

FY2013 and FY2014.

FY2016 Status of the Sequester

Among many actions, the Bipartisan Budget Act of 2015, P.L. 114-74, increased discretionary

spending limits for FY2016. As a result, although a 6.8% sequester reduction in non-exempt

mandatory programs went into effect on October 1, 2015, for FY2016, there are no sequestration

reductions applicable to discretionary programs, projects, and activities.16

However, if any EB

benefits become available, they would be subject to the FY2016 6.8% sequestration reduction.

Additionally, there may be certain delayed EB or EUC08 benefit payments and related

administrative costs made in FY2016 from prior fiscal years (for example, because of appeals).

Those payments would be subject to the FY2016 6.8% sequestration reduction because FY2016

funds have been apportioned for these purposes.

13 The other programs became effective in 1958, 1961, 1972, 1975, 1982, 1991, and 2002. For more details on these

programs, see CRS Report RL34340, Extending Unemployment Compensation Benefits During Recessions. 14 For more details on the early termination of EUC08 benefits in North Carolina, see CRS Report R41859,

Unemployment Insurance: Consequences of Changes in State Unemployment Compensation Laws 15 See CRS Report R42972, Sequestration as a Budget Enforcement Process: Frequently Asked Questions, for a

discussion of the sequester order. 16 For details, see Employment and Training Administration, U.S. Department of Labor, Unemployment Insurance

Program Letter, UIPL 12-16, Washington, DC, March 29, 2016, http://wdr.doleta.gov/directives/attach/UIPL/

UIPL_12-16_Acc.pdf. For more information on the sequester order, see CRS Insight IN10389, Bipartisan Budget Act

of 2015: Adjustments to the Budget Control Act of 2011.



FY2015 Sequester of UI Benefits

In FY2015, the sequestration order required a 7.3% reduction in all nonexempt nondefense

mandatory expenditures. Therefore, the sequestration order required that EB expenditures be

reduced by 7.3% (only on the federal share of EB benefits) for weeks of unemployment

beginning on October 4, 2014, through September 26, 2015. EB was not available in any state

during FY2015.

State Fiscal Concerns Alleviating State

Unemployment Compensation Stress If a recession is deep enough and if state unemployment tax (SUTA) revenue is inadequate for

long periods of time, states may have insufficient funds to pay for UC benefits. Federal law,

which requires states to pay these benefits, provides a loan mechanism within the UTF

framework that an insolvent state may opt to use to meet its UC benefit payment obligations.17

States must pay back these loans. If the loans are not paid back quickly (depending on the timing

of the beginning of the loan period), states may face interest charges and the states’ employers

may face increased net FUTA rates until the loans are repaid.18

As of October 18, 2016, only California and the Virgin Islands had outstanding loans. Together

they owed a cumulative $3.6 billion to the federal accounts within the UTF.19

In general, the

increased state borrowing to fund UC benefits reflects the magnitude of the recession and the

slow employment recovery afterward.20

President’s Budget Proposal for FY2017 The President’s budget proposal for FY2017 attempts to address some of the state and federal

financing concerns.21

In addition, the proposal expands and reforms UI benefits and benefit

availability.

17 Federal UC law does not restrict the states from using loan resources outside of the UTF. Depending on state law,

states may have other funding measures available and may be able to use funds from outside of the UTF to pay the

benefits (such as issuing bonds). 18 Details on how states may borrow federal funds to pay for UC benefit are in CRS Report RS22954, The

Unemployment Trust Fund (UTF): State Insolvency and Federal Loans to States (out of print; available from the

author). 19 U.S. Department of the Treasury, Bureau of Public Debt, Title XII Advance Activities Schedule October 20, 2016, at

http://www.treasurydirect.gov/govt/reports/tfmp/tfmp_advactivitiessched.htm. 20 For the current solvency of each state’s financing system, see the Division of Fiscal and Actuarial Services, Office of

Unemployment Insurance, U.S. Department of Labor, State Unemployment Insurance Trust Fund Solvency Report

2015, Washington, DC, March 2016, http://ows.doleta.gov/unemploy/docs/trustFundSolvReport.pdf. 21 The President’s detailed budget proposal for UC in FY2017 is accessible at http://www.dol.gov/sites/default/files/

documents/general/budget/CBJ-2017-V1-08.pdf. For examples on previous proposals on changing the underlying tax

structure, see reports released by the Advisory Council on Unemployment Compensation (ACUC), Collected Findings

and Recommendations: 1994-1996, AUCU, Washington, DC, 1996. Additionally, the report proposed changes to the

underlying loan requirements, some of which were incorporated into 20 C.F.R. §606.32 in 2010.



Federal Unemployment Tax Changes

In 2017, the President’s budget proposal for FY2017 would (1) reauthorize the lapsed 0.2%

Federal Unemployment Tax (FUTA) surtax;22

and (2) increase the taxable wage base to $40,000

while decreasing the effective FUTA tax rate to 0.165% (making it approximately actuarially

equivalent to 0.8% on $7,000). After 2018, the taxable wage base would be indexed to inflation.

Beginning in 2018, the proposal will also require states to impose a minimum tax per employee

that equates to 0.175% of the FUTA wage base ($70 per employee in 2018).

Requiring States to Maintain Increased UTF Balances

In addition, the President’s budget proposal for FY2017 would require states to maintain a UTF

account balance of at least 50% of the state’s Average High Cost Multiple23

(AHCM). The

proposal would alter the rules for calculating the net FUTA rate, requiring a net FUTA rate on a

state’s employer if that state maintained an AHCM of less than 50% on two or more consecutive

January firsts. The additional FUTA revenue would be deposited into the state UTF account and

would be terminated once the AHCM met the 50% criteria.

State Requirement to Provide 26 Weeks of UC

The President’s budget proposal for FY2017 would require all states to have a maximum duration

of at least 26 weeks for the regular program and also would require states to adopt three policies

that expand access to UC benefits: (1) states must adopt an alternative base period24

option for

determining UC eligibility; (2) states may not deny benefits to claimants who seek part-time

employment; and (3) states must allow unemployed workers to be eligible for UI benefits if they

leave their jobs for family reasons.

Modernization Incentives

Finally, the President’s budget proposal for FY2017 would provide up to a total of $5 billion in

lump sum payments to states for opting for changes that “modernize” state UC laws. To become

eligible for the payments, states would have to provide for broader federal access to UI wage

records; adopt e-filing and/or increased penalties for employer non-reporting; provide for at least

22 Congress first passed a temporary FUTA surtax in 1976, and since 1983 the surtax had been applied as 0.2% on the

first $7,000 of employee wages until it lapsed on July 1, 2011. Thus, since then, the effective FUTA tax on employers

for each employee is 0.6% (a decrease from 0.8%) on the first $7,000 of wages. 23 The average high-cost multiple (AHCM) is the ratio of actual UTF account balances to the average of the 3 highest

years of benefit payments experienced by the state over the past 20 years. Presumably, the average of the 3 highest

years’ outlays would be a good indicator of potential expected UC payments if another recession were to occur. Under

these assumptions, if a state had saved enough funds to pay for an average high year of UC benefit activity, its AHCM

would be at least 1.0. 24 The base period is the time period during which wages earned or hours/weeks worked are examined to determine a

worker’s monetary entitlement to UC. Almost all states use the first four of the last five completed calendar quarters

preceding the filing of the claim as their base period. This may result in a lag of up to five months between the end of

the base period and the date a worker becomes unemployed. As a result there are some instances when workers with

substantial labor market attachment are ineligible for UC benefits. In particular, recent entrants to the workforce, or re-

entrants, may be ineligible under this definition. Federal law allows states to develop expanded definitions of the base

period. More than two-thirds of states allow the use of an alternative base period (ABP) for workers failing to qualify

under the regular base period. For example, if the worker fails to qualify using wages and employment in the first four

of the last five completed calendar quarters, then the state might use wages and employment in the last four completed

calendar quarters.



26 weeks of benefits in the regular program; and have a definition of “misconduct” that conforms

to the U.S. DOL model definition. States would also have to commit to not make qualifying

requirements more stringent or reduce benefit levels. Additionally, to receive the incentive

payment, a state would have to adopt two work incentive reforms and one benefit expansion

reform.

The work incentive options would include (1) progressively more intense reemployment service

delivery as duration of benefit receipt lengthens; (2) improved reemployment services for UI

claimants; (3) voluntary work-based programs for UI claimants, such as on-the-job training or

apprenticeship programs or subsidized temporary work programs; (4) relocation assistance

programs coupled with individual case management, in-person career counseling, provision of

customized information on availability of job opportunities in other locations, and referrals to

suitable jobs in other locations; and (5) improvement of data systems to enable and provide

access to workforce and educational entities for performance, research, and evaluation.

The benefit expansion options would include (1) allow UC benefits to be paid to claimants in

approved training; (2) establish a maximum weekly benefit amount that is at least two-thirds of

the state’s average weekly wage in covered employment in the most recent 12-month period for

which data are available; and (3) improve eligibility provisions related to temporary workers.

EB Reform

The President’s budget proposal for FY2017 also would alter and replace most of the EB

program. The mandatory IUR trigger would be replaced by a modification of the current optional

TUR trigger.25

Funding for EB would continue to be shared (50% state, 50% federal) if the

maximum number of weeks of UC benefits available in the state was fewer than 26 weeks.

Funding for EB would be 100% reimbursed with federal funds if the state offers at least 26 weeks

of UC. In addition, all EB claimants would be required to receive Reemployment Services and

Eligibility Assessments (RES/REAs) as a condition of eligibility.26

If federal funds in the UTF

were insufficient to pay EB, funds would be provided from the Treasury’s General Fund through

non-repayable advances.

Wage Insurance

The President’s budget proposal for FY2017 would create a new wage insurance27

program that

would replace half of lost wages, up to $10,000 over two years for certain formerly unemployed

25 The program would have four tiers of 13 weeks each, using trigger thresholds of 6.5%, 7.5%, 8.5%, and 9.5%. This

would create up to 52 weeks of EB if a state met the economic conditions. A state could trigger onto a tier either by

three-month average TUR at or above the percentage or by having an unemployment rate plus the change in rates from

a comparable period in one of the previous two years at or above the trigger value. 26A way of enforcing job search requirements and providing employment-related assistance to recipients is through

Reemployment and Eligibility Assessments (REAs). Since 2005, the federal government has provided grants to state

workforce agencies to fund REAs. These are in-person interviews with selected UC claimants to assure that they are

complying with the eligibility rules, determine if reemployment services are needed for the claimant to secure future

employment, refer the individual to reemployment services (RES) as necessary, and provide labor market information

that addresses the claimant’s specific needs. REAs replaced a previous Eligibility Review Program that had been

funded by DOL in which UC claimants were interviewed to confirm their eligibility for benefits. For more information,

see the “Reemployment and Eligibility Assessments” section of CRS Report R43044, Expediting the Return to Work:

Approaches in the Unemployment Compensation Program. 27 For information on Wage Insurance and UC, see CRS Report R43044, Expediting the Return to Work: Approaches in

the Unemployment Compensation Program.



workers who find employment at lower salaries. The reemployed worker’s new position must pay

less than $50,000/year and workers must have worked for their prior employer for at least three

years to be eligible for this program.

Enacted Laws in the 114th Congress

The National Defense Authorization Act for Fiscal Year 2016

(P.L. 114-92)

Senator Ron Johnson sponsored S. 1356, which was enacted as the National Defense

Authorization Act for Fiscal Year 2016, P.L. 114-92. In addition to many other actions, the law

alters certain conditions for individuals to receive Unemployment Compensation for Former

Servicemembers (UCX).28

The law generally prohibits the concurrent receipt of UCX and Post-

9/11 Veterans Educational Assistance but does provide exceptions.29

In addition, the law doubles

the number of days (from 90 to 180 continuous days) a reserve member of the Armed Forces

would have to be on active duty to qualify for UCX.

Two earlier proposals had similar provisions, but did not include exceptions to the prohibition of

concurrent receipt. Representative Mac Thornberry sponsored H.R. 1735, the National Defense

Authorization Act for Fiscal Year 2016,30

which was vetoed by President Obama on October 22,

2015. Senator John McCain sponsored an identically named bill (S. 1376) that contained similar

provisions.

Legislative Proposals in the 114th Congress

Concurrent Receipt of SSDI and UI Benefits31

S. 499 (Senator Orin Hatch), S. 2005 (Senator David Vitter), and H.R. 918 (Representative Sam

Johnson), all titled the Social Security Disability Insurance and Unemployment Benefits Double

Dip Elimination Act, would require for any month that an individual is entitled to UC, EB, or

Trade Adjustment Assistance (TAA) for at least one week, he or she shall be deemed to have

engaged in substantial gainful activity (SGA) and be disqualified from receiving SSDI benefits. If

an individual is participating in a period of trial work (while an SSDI beneficiary), the individual

shall be deemed to have rendered services in a month if he or she is entitled to UC, EB, or TAA

for any week that month.

28 For information on UCX, see CRS Report RS22440, Unemployment Compensation (Insurance) and Military Service.

For information on Post-9/11 Veterans Educational Assistance see CRS Report R42755, The Post-9/11 Veterans’

Educational Assistance Act of 2008 (Post-9/11 GI Bill): A Primer. 29 5 U.S.C. §8525(a) provides exceptions to the prohibition on concurrent receipt of UCX and educational assistance. 30 The bill contained two provisions regarding unemployment insurance for former servicemembers. Section 535 of S.

1376 includes a provision that would prohibit the concurrent receipt of unemployment benefits for former military

servicemembers (UCX) and Post-9/11 Veterans Educational Assistance. Section 592 of the bill would double the

number of days a reserve member of the armed forces would have to be on active duty to qualify for UCX (from 90 to

180). 31 For an overview of concurrent receipt of SSDI and UI benefits in the 114th Congress, see CRS Report R43471,

Concurrent Receipt of Social Security Disability Insurance (SSDI) and Unemployment Insurance (UI): Background

and Legislative Proposals.



H.R. 5919, the Preserving and Reforming SSDI (PAR-SSDI) Act of 2016, was introduced by

Representative David Schweikert. H.R. 5919 would require (among other provisions) that for any

week in whole or in part within a month that an individual is paid or determined to be eligible for

UC, he or she shall be deemed to have engaged in substantial gainful activity and so be

disqualified from receiving Social Security disability benefits after a certain period has elapsed.

S. 343, the Reducing Overlapping Payments Act, was introduced by Senator Jeff Flake. S. 343

would require for any month that an individual is entitled to UC, no SSDI benefits be paid.

UI Program Integrity

Representative David Reichert sponsored H.R. 2503, the Permanently Ending Receipt by

Prisoners Act. H.R. 2503 would require states to use the Prisoner Update Processing System

(PUPS) data compiled by the Social Security Administration.32

States would use PUPS data to

confirm that an individual is not confined in a jail, prison, or other penal institution or

correctional facility. Any individual who is incarcerated would not be eligible for regular UC

benefits because the individual would not be available for work.

Representative Kevin Brady sponsored H.R. 2512, the Furloughed Federal Employee Double Dip

Elimination Act. The bill would clarify that if a federal employee were to receive back pay for a

period during which he or she had been furloughed due to a lapse in federal appropriations, the

federal employee would have to repay any unemployment compensation for that period.

Unemployment Compensation for Former Servicemembers

See the description of the enacted “The National Defense Authorization Act for Fiscal Year 2016

(P.L. 114-92)” for information on Unemployment Compensation for Former Servicemembers

(UCX) proposals.

Drug Testing33

Representative Steve Pearce sponsored H.R. 1136, the Accountability in Unemployment Act of

2015. The bill would require individuals to undergo drug testing and test negative to be eligible

for UC benefits. Additionally, H.R. 1136 would require a 30-day waiting period for applicants

who test positive for any one of several specified drugs and would require individuals to be

ineligible for UC benefits for five years after the third positive drug test.

Representative Earl Carter sponsored H.R. 2148, the Ensuring Quality in the Unemployment

Insurance Program (EQUIP) Act. The bill would require any UC applicant to complete a

substance abuse risk assessment. If the applicant is deemed high-risk, the applicant must pass a

controlled substances test to receive UC benefits. Those who do not pass the test would be

ineligible for benefits for 30 days and then must be retested to determine eligibility.

Representative Kevin Brady introduced H.R. 5945, the Ready to Work Act of 2016. The proposal

would terminate the final rule issued by the U.S. DOL on August 1, 2016, the “Federal-State

Unemployment Compensation Program; Middle Class Tax Relief and Job Creation Act of 2012

32 The Prisoner Update Processing System (PUPS) data contain the individual’s name, Social Security number, date of

birth, sex, date of conviction, date of confinement, release date, inmate status code, and such other information as may

be supplied or acquired during the benefit suspension or reinstatement process. 33 For implications of required drug testing, see CRS Report R42326, Constitutional Analysis of Suspicionless Drug

Testing Requirements for the Receipt of Governmental Benefits.



Provision on Establishing Appropriate Occupations for Drug Testing of Unemployment

Compensation Applicants” (81 Fed. Reg. 50298). This DOL rule establishes occupations that

regularly conduct drug testing. As such, the rule implements a change made under the Middle

Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96; February 22, 2012) that allows states

to drug test UC applicants for whom suitable work is available only in an occupation that

regularly conducts drug testing.

Rehiring UI Beneficiaries and Exhaustees

Representative Bill Pascrell introduced H.R. 481, the Long-Term Unemployed Hiring Incentive

Act. The bill would extend the work opportunity tax credit (WOTC) for companies that hire any

UC exhaustees through December 31, 2017.34

Representative Julia Brownley introduced H.R. 2265, the VOW to Hire Heroes Extension Act of

2015, and Senator Richard Blumenthal introduced an identically named bill, S. 1517. This

legislation would expand and extend WOTC for companies that hire veterans through December

31, 2018. In addition, the bill would expand the program by allowing tax-exempt organizations to

apply a credit against payroll taxes for hiring a veteran.

Representative Barbara Lee introduced H.R. 2721, the Pathways Out of Poverty Act of 2015, and

Representative Frederica Wilson introduced H.R. 3555. Both proposals would amend the work

opportunity tax credit to allow an increased work opportunity tax credit for long-term

unemployed individuals (individuals who are unemployed and receiving unemployment

compensation for six months or more).

Representative David McKinley introduced the Manufacturing Economic Recovery Act of 2015,

H.R. 3622. The bill, among other items, would create a permanent work opportunity tax credit for

hiring a full-time employee in a manufacturing facility located in the United States and includes

an increased credit for hiring individuals receiving unemployment compensation.

Delegate Eleanor Holmes Norton introduced the Reducing Long-Term Unemployment Act, H.R.

4593. The bill would suspend employment and railroad retirement taxes for employers who hire

unemployed individuals through 2017. The aggregate reduction in taxes from such suspension

would be limited to $5,000 per employee.

Representative Bonnie Watson Coleman introduced the Investing in Older Americans Act of

2016, H.R. 4973. The bill would make the WOTC permanent and expand it to include the hiring

of older long-term unemployment recipients who are at least 55 years old at the time of hiring.

The bill would limit the amount of the qualified first-year wages that may be taken into account

under the WOTC to $14,000 for a qualified older long-term unemployment recipient.

Reauthorize Emergency Unemployment Compensation

Two bills would have reauthorized the lapsed temporary Emergency Unemployment

Compensation (EUC08) benefits until the end of 2015: H.R. 2721, the Pathways Out of Poverty

Act of 2015 (Representative Barbara Lee) and H.R. 3555 (Representative Frederica Wilson).

34 The authorization of the WOTC was extended after the introduction of this proposal by P.L. 114-113. Under current

law, wages earned by eligible workers who begin work before December 31, 2019, are eligible for the WOTC. For

additional information on WOTC, see CRS Report R43729, The Work Opportunity Tax Credit.



Vouchers and Demonstration Projects

Representative James Renacci sponsored H.R. 2509, Flexibility to Promote Reemployment Act.

The bill would make a number of changes to the state UC demonstration projects created by the

Middle Class Tax Relief and Job Creation Act of 2012 (P.L. 112-96).35

The bill would expand the

existing authority for state UC demonstration projects by authorizing 10 states per year to conduct

approved demonstration projects (the current authority is only for 10 states total) and extending

the time period that state demonstration projects may be approved by DOL by four years until

December 31, 2019. H.R. 2509 would also revise state UC demonstration project requirements,

including removing a requirement that any direct disbursements paid to employers for hiring UC

claimants not exceed an individual’s UC weekly benefit amount and requiring that DOL approve

state applications for UC demonstration projects based on the order of receipt. Additionally, the

bill would transfer the responsibility for the state UC demonstration project impact evaluation

from the states, as under current law, to DOL and require a specific procedure for termination of

the state UC demonstration project by DOL.


Representative Frederica Wilson introduced H.R. 3555. Both proposals, among many provisions,

would allow states to (1) establish a Bridge to Work program to provide EUC08 claimants with

short-term work experience placements with eligible employers; (2) provide a wage insurance

program to pay, for up to two years, an EUC08 claimant who obtains reemployment up to 50% of

the difference between the wages received at the time of work separation and the wages received

for reemployment; and (3) provide a program of enhanced reemployment services to EUC08

claimants, including unemployed individuals who have exhausted their EUC08 rights.

Job Training and Education

Representative Rodney Davis sponsored H.R. 2219, the Opportunity KNOCKs Act. The bill

would require that states allow UC beneficiaries to participate in a Workforce Investment Act

(WIA) authorized job training program and remain eligible for benefits.36

If the UC beneficiary

has been profiled to exhaust regular benefits, the individual may be enrolled in any coursework

necessary to attain a recognized postsecondary credential.

Relocation Subsidies

Representative Tony Cárdenas sponsored H.R. 2755, the American Worker Mobility Act of 2015.

The proposal would authorize the U.S. Department of Labor to grant a relocation subsidy of up to

$10,000 to long-term unemployed workers.

Short-Time Compensation37


Representative Frederica Wilson introduced H.R. 3555. Both proposals would provide temporary

35 For more details on these state UC demonstration projects, as currently authorized under 42 U.S.C. §505, see CRS

Report R41662, Unemployment Insurance: Legislative Issues in the 112th Congress. 36 The Workforce Innovation and Opportunity Act of 2014 (WIOA; P.L. 113-128) amended and reauthorized many

Workforce Investment Act (WIA) programs. 37 See CRS Report R40689, Compensated Work Sharing Arrangements (Short-Time Compensation) as an Alternative

to Layoffs, for details on STC.



100% federal financing for up to three years and six months after enactment for short-time

compensation (STC) benefits in states with existing STC programs. States without existing STC

programs would be allowed to enter into an agreement with DOL for up to two years and three

months after enactment and receive federal reimbursement for administrative expenses, as well as

temporary federal financing of 50% of STC payments to individuals, with employers paying the

other 50% of STC costs. If a state enters into an agreement with the Secretary of Labor and then

subsequently enacts a law providing for STC, that state would then be eligible to receive 100%

federal financing.

The proposals would also award grants of up to $700 million total to eligible states, with one-

third of each state’s grant available for implementation and improved administration purposes and

two-thirds of each state’s grant available for program promotion and enrollment of employers.

This proposal would also provide $1.5 million for DOL to submit a report to Congress and the

President, within four years of enactment, on the implementation of this provision.

Representative Rosa DeLauro introduced H.R. 5408, the Layoff Prevention Extension Act of

2016. The proposal would extend federal financing of the STC programs for an additional two

years. Additionally it would extend the deadline for a state to submit its application for a STC

grant through December 31, 2016.

Unemployment Benefits for Energy Workers

Senator Bernie Sanders introduced S. 2398, the Clean Energy Worker Just Transition Act. Among

other provisions, the proposal would provide additional weeks of unemployment benefits for

adversely affected workers in coal-related or coal-dependent or similar energy industries. The

workers’ employment status must have changed because of the low cost of competing alternative

forms of energy.38

Representative Evan Jenkins introduced H.R. 5669, the Creating Opportunities for America’s

Laid-off (COAL) Miners Act of 2016. The proposal would add up to 26 weeks of additional

unemployment benefits for adversely affected workers in coal-related or coal-dependent or

similar energy industries.

Domestic Violence

Representative Lucille Roybal-Allard and Senator Patty Murray introduced the Security and

Financial Empowerment Act of 2015, H.R. 3841 and S. 2208, respectively. The bills would

require states to consider an individual who quit a job as a result of domestic or sexual violence to

be eligible for UC benefits.

Author Contact Information

Julie M. Whittaker

Specialist in Income Security

[email protected], 7-2587

Katelin P. Isaacs

Analyst in Income Security

[email protected], 7-7355

38 The assistance would include temporary additional unemployment compensation, health insurance premium subsidy

tax credits, training and support for employment, as well as additional pension benefits.

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